CCAP to simplify credit card terminologies to help users

THE Credit Card Association of the Philippines (CCAP) announced last Monday it would launch an information campaign that would simplify common and complex credit card terminologies in a bid to bridge the gap between regulatory language and everyday understanding.

The CCAP, composed of 16 member institutions, explained the campaign aims to make these terms easily understandable to all credit cardholders.

The simplified credit card terminologies will be shared across CCAP’S social media platforms. This initiative aims to ensure that credit cardholders can easily grasp the essential information, promoting better financial decision-making.

“By fully understanding the credit card terminologies, consumers can reap the full benefits of their credit card such as using it interest-free by paying in full on or before the due date or maximizing the credit float by making large purchases just after the billing cutoff date to enjoy up to 51 days of credit without interest, thereby managing their cashflows more effectively,” CCAP Executive Director Alex Ilagan was quoted in a statement as saying.

Since adopting its tagline “Pushing for Responsible Credit” in 2015, the CCAP has led a continuous campaign to enhance credit card literacy.

This includes releasing educational materials in print and social media, conducting seminars at major colleges and universities in Metro Manila, and hosting webinars for both private and public sector employees.

Below are some of the common and often misunderstood credit card terminologies listed by the CCAP along with their definitions:

1. “Payment Due Date” is the deadline for paying your credit card bill, which you will see on your credit card statement of account.

2. “Total Amount Due” (TAD) is composed of all charges, fees, and outstanding balances that must be paid in full on or before the due date to avoid penalties or interest charges.

3. “Minimum Amount Due” (MAD) is the least you must pay to avoid penalties. It is computed based on a percentage (usually 3 percent to 5 percent) of the total outstanding balance or a certain fixed amount as disclosed by your credit card issuer. Unlike the TAD, paying only the MAD will incur interest charges.

4. “Late Penalties” are only applied if you fail to pay either the TAD or the MAD on or before the payment due date.

5. “Interest Charges” or “Finance Charges” apply only if you do not pay the whole TAD.

6. “Fees” come in various forms; some avoidable, others not. For example, fees for cash advances, balance transfers, and installments are typically unavoidable. Penalty fees, such as late payment fees and interest charges, can be avoided by making timely and full payments.

7. “Credit Limit” is the maximum amount you are allowed to charge against your card.

8. “Billing Cycle” or “Cut-off Date” is the length of time between the last statement closing date and the next with an interval of about 30-days every month. All the transactions you make after the cut-off date will be included in the next Billing Statement. This is important when planning your finances.

9. “One-time PIN” (OTP) is a temporary code (usually composed of 4-digit numbers to 6-digit numbers) sent to your registered mobile number to let you know that a transaction is being charged against your credit card and to confirm whether you authorized it. It is system-generated and disclosed only to the cardholder. This is not to be shared over the phone or via text to anyone.

10. “Card Verification Value” (CCV) is the 3-digit code on the back of your credit card. It’s used for online purchases to ensure you have the physical card. Just like the OTP, this code should never be shared with anyone to prevent online fraud.